Hong Kong based Babel Finance freezes withdrawals as contagion spreads

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Crypto Daily™
8w ago2022-06-17

Babel Finance suspends all further withdrawals, citing that it is “facing unusual liquidity pressures” as the crypto market flounders, perhaps due to the ongoing issues with Three Arrows Capital and Celsius.

The crypto markets are facing a potential liquidity squeeze as Babel Finance becomes the third major lender to freeze withdrawals. Crypto lender Celsius also froze withdrawals and transfers on June 12, citing “extreme” conditions.

Bitcoin hovers at the major support zone of $20,000, and is down around 70% so far. The rest of the cryptocurrency market has fallen further and harder. All this has contributed to a sell-off perhaps somewhat akin to a bank-run, as liquidity flows out of the system.

Babel Finance is the latest lender to try to stem the outflows, and according to an article on the Mail Online, a statement from the company reads:

“We are in close communication with all related parties on the actions we are taking in order to best protect our customers.

During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately. 

We apologize sincerely for any inconvenience caused.”

It was reported by Crypto Daily on June 16 that Celsius had called in “restructuring lawyers” from the law firm Akin Gump Strauss Hauer & Feld LLP. According to the company, it had taken action: 

“to stabilize liquidity and operations while we take steps to preserve and protect assets.”

It added:

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,”

Binance, the biggest crypto exchange by trading volume, also paused withdrawals on Monday, but this was claimed to be because of a “stuck transaction”. Normal service has since resumed.

Other major crypto players, such as Coinbase, Crypto.com, and BlockFi, have cut jobs in order to better weather the “crypto winter”.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.